according to § 105 (1) HGB, the open commercial company (OHG) is a partnership whose purpose is aimed at the operation of a commercial trade under a joint company. All shareholders are liable to the company creditors without restriction. We explain the structure of an OHG and the advantages and disadvantages of this form of company.

According to § 105 (1) HGB, OHG is a partnership whose purpose is to operate a commercial trade under a joint company. All shareholders are liable to the company creditors without restriction. A trade is any externally recognizable, permitted, self-employed, planned for a certain period of time with the intention of making a profit, which is not a freelance profession. Since the OHG requires the operation of such a trade, freelancers, such as doctors or lawyers who join together to form a company, do not have the possibility of founding such a company. They are rather entitled to the legal forms of the GbR or partnership company.

First, the question arises as to how the OHG differs from the other legal forms of partnerships.

Both the company civil law (GbR) and the OHG are partnerships. However, OHG is directed towards the operation of a commercial business within the meaning of § 1 of the following HGB. OHG is therefore geared towards operating a commercially established business operation. However, if several persons join together and do not exceed the threshold of the trading operation, a GbR exists. They then have the opportunity to obtain the legal form of the OHG by entering it in the commercial register.

In addition, the increase in the scope of business into a commercial sector automatically leads to the GbR becoming an OHG. This automatism is called the principle of the identity of partnerships. Therefore, there may be changes in the form of society. However, the decline in the business operations of an OHG registered in the commercial register does not mean that it automatically becomes a GbR. Rather, it will only be deleted from the commercial register on request according to § 105 paragraph 2, § 2 sentence 3 HGB.

The KG is also equipped to operate a commercial trade. However, unlike in the case of the limited partnership, OHG does not limit liability to any of the shareholders. Consequently, creditors of an OHG can access the entire assets of the shareholders. However, if the limitation of the liability of a shareholder of a limited partnership is ineffective, there is also an OHG. OHG therefore functions as a kind of catch-up company, since it is always present and independent of the will of the shareholders, if the conditions for it are met.

Accordingly, Vor-GmbH also becomes an OHG if the entry in the commercial register is omitted and it nevertheless operates a commercial trade.

An OHG can arise from a company operating a commercial trade. In order for this to occur, the company’s business operation must in itself require a business operation established in a commercial manner. If he does not require this, there is a small business. This is determined objectively and by the nature of the business and its scope. Criteria are: participation in exchange, local, long-range or international activities, extensive advertising, the number of services and employees or the size of storage.

§ 1 paragraph 2 HGB states a rebuttable presumption that every business enterprise is also a commercial industry. Therefore, the operator bears the burden of presentation and proof that he operates only a small business. Suffice it to demonstrate that its operation does not require a commercial establishment, either by type or scale.

The establishment of the OHG is to be registered by the shareholders for registration in the commercial register in accordance with § 106 (1) HGB. However, the registration only has a purely declaratory meaning if a commercial trade exists anyway. Therefore, OHG is created anyway in the presence of a commercial trade. Only if such is not available, the registration in the commercial register is necessary. The application must then be accompanied by the names of the shareholders involved, the company and the registered office of the company, and the power of representation of the shareholders.

The commercial register must of course be updated continuously by registering changes. Therefore, for example, changes in the power of representation and the entry or exit of shareholders must be registered. If these entries are omitted, the principle of publicity of the commercial register applies.

The management of a joint company, i.e. a name, is not a mandatory prerequisite for the effective creation of an OHG. It should only be clear that the OHG is directed to the common appearance of the shareholders to the outside world. As a result, OHG also differs from the silent society.

The OHG is treated as a merchant according to § 6 (1) HGB. Therefore, the provisions of §§ 343 following HGB concerning commercial business apply to them. These regulations are stricter, i.e. the general civil law regulations, since they assume that merchants must have appropriate knowledge. Therefore, there are, for example, complaints whose violation means the loss of certain rights.

In the past, OHG was the most common form of company in Germany. Especially as a result of unlimited liability, OHG was regarded as a serious and trustworthy company in legal transactions. But that has changed. Unlimited liability tends to speak against OHG in the choice of legal form.

In addition, the possibilities of raising capital are limited. For example, company shares cannot be traded as in the case of a public limited company. Society is therefore not the right society for larger companies with high financial needs.